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31 December 2012

Federal Bank Excessive Reserves

This is a chart of how much money Federal Reserve member banks have on deposit in excess of what is legally required. WE are paying them interest on this money. I recently posted a comment about how nice it would be to be able to borrow 100 million dollars from the government interest-free and then loan it back to them with interest. Guaranteed risk-free income. This is EXACTLY what the banks are doing. Not sort-of, or kind-of-like or similar, it is exactly what they are doing. The money was loaned to the banks to re-loan and stimulate the economy. But they chose to, and were allowed to, keep the money.